Senate candidate Monica Wehby (R) recently used information from WashingtonWatch.com to argue a point in her campaign to unseat incumbent Oregon Senator Jeff Merkley (D). PolitiFact Oregon called her statement false, but they got it wrong. Wehby was pretty much right. There’s nuance to understand. Read on…
Wehby, the Portland pediatric neurosurgeon challenging Merkley, described Merkley’s vote in favor of S. 1769, the Rebuild America Jobs Act (112th Congress) as “typical of a Washington insider like Senator Merkley.” She said she would have voted no on the bill “because this legislation would have cost the average American family $1,000 a year while making no significant impact to fix our infrastructure and roads.”
WashingtonWatch.com was the source of the number that Wehby used (actually $958.40), and it’s a good reflection of the cost the bill would have had if it had passed. But PolitiFact Oregon called the statement false.
To my surprise, PolitiFact Oregon used yours truly as its chief authority on that finding. The report said that I “faulted Wehby’s claim on two counts.”
The first involved the $958.40 figure itself. In reality, [Harper] said, only half of that would come in the form of new taxes. The remainder really doesn’t count since it’s in the form of new spending. And while it could be argued that new spending amounts to a long-term debit, the CBO’s own finding that the bill was budget-neutral negates that point.
I didn’t say or imply to Politifact that spending “really doesn’t count.” It counts. The methodology we use here counts it.
Here’s what I wrote to the reporter:
The CBO score for S. 1769 (click “Read an analysis of the bill” on the bill’s page) shows revenues (taxes – a cost) of about $56.8 billion and outlays (spending – a cost) of $56.5 billion. That made S. 1769 a high-cost bill — it proposed increasing both taxes and spending — but it was fairly budget-neutral, increasing the average family’s share of the national debt by only about $40 per average family.
If Wehby claimed that the bill would have cost the average American family about $1,000 in new taxes, I think that is incorrect. It would have cost about $500 per family in new taxes and about $500 per family in new spending.
Wehby’s claim was not that it would cost $1,000 in new taxes, though, as the PolitiFact reporter said to me in his inquiry. It was that the bill “would have cost the average American family $1,000 a year.” That is a correct number. (The reporter did not catch or raise with me that our net present value calculation produces a one-time cost figure—not the cost per-year.)
While I pointed out that the bill was relatively budget-neutral, candidate Wehby didn’t make any claim about the budgetary effects of the bill. A bill can cost a lot and be budget-neutral. This one did and was.
The second point that the Politifact report attributed to me “was that ‘average families’ would not have borne the burden of any new costs because language in the bill made clear that it would be financed by a 0.7 percent surtax on millionaires.”
Here’s what I said to the reporter on that question:
As the bulk of the revenues would have come from a surtax on people with a modified AGI above $1,000,000, I see an argument that this would not have come from “average families” in the “median” or “mode” sense. But our calculations are literal averages — the arithmetic mean — which is produced by dividing costs among all families in the U.S. That approach makes the most sense for outlays, as funds in the U.S. treasury can be thought of as “owned” by all the people, and expenses should be treated as falling on all of us. The average/arithmetic mean makes less sense when it comes to revenues because they often come from distinct sets of taxpayers, such as the relatively well off.
“It’s up to you,” I wrote to the reporter, “whether you believe it’s expected in the context of Wehby’s statement to get into tax incidence. You can ding her for that omission if your judgment is that it’s something she should have included.”
In other words, I didn’t fault Wehby for failing to discuss tax incidence. The PolitiFact reporter did, falsely attributing it to me. I called Wehby’s statement “accurate” and left the question of subtlety around tax incidence to the reporter.
There’s a real point behind the reporter’s conclusion, of course: It’s an entirely legitimate policy proposal to tax higher-income people and use the funds to pay for road construction and such. But the legitimacy of that policy proposal doesn’t make Wehby’s statement false. It was a correct and literally accurate statement about the costs of the bill.
It turns out that issues around the “costs” of legislation are hard to figure out when a bill has both revenue and spending measures. We’ve given it a lot of thought over years here and come up with a pretty good methodology (explained and caveated at WashingtonWatch.com’s “about” page.)
It’s unfortunate that PolitiFact Oregon is faulting Wehby for making an accurate statement about cost rather than directly raising the question whether Oregon voters would prefer a tax increase aimed at wealthier people.